How to Write a Nonprofit Business Plan

A business plan can be an invaluable tool for your nonprofit organization. An effective business plan pushes you to conduct research, clarify your purpose, and refine your messaging even if it is short. We will discuss what a nonprofit business plan is, why it is necessary, ten steps to help you create one, and dos and don’ts of creating one.

The nonprofit business plan is dead – or is it?

It is common for nonprofit organizations to produce outdated and cumbersome business plans for the sake of creating them or because donors require them.

Nevertheless, these plans are crucial to the success of your nonprofit organization. Moreover, without a nonprofit business plan, you will have difficulty obtaining loans and grants, attracting corporate donors, meeting qualified board members, and maintaining your nonprofit.

Even the best ideas can be rendered useless if they are not formulated, executed, and implemented in a strategic manner. As described in This This article provides a template for nonprofit business plans and discusses the specific requirements for them.

Nonprofit Business Plans: What Are They?

The nonprofit business plan describes your nonprofit as it is today and sets out a roadmap for the next three to five years. Additionally, it outlines your goals and the steps you plan to take to achieve them. The nonprofit business plan should be updated frequently in order to reflect your evolving goals and circumstances.

Your business plan outlines who, what, when, where, and how you intend to impact your industry.

Business plans for nonprofit organizations should not be unnecessarily lengthy. There is only as much information as is necessary in them. Your organization may require as few as seven pages, one for each of the sections you will read about below and see in our template, or up to 30 pages if your organization grows.

What is the purpose of a Nonprofit Business Plan?

Nonprofit business plans are essential regardless of whether your organization is small and barely making it or if it has been running successfully for years. Why?

An effective nonprofit business plan serves as a blueprint for how your nonprofit will be run, who will be responsible for what, and how you plan to reach your objectives.

Your nonprofit organization will need a business plan if it intends to receive any type of support, including monetary or in-kind donations, or even volunteer assistance. The purpose and goals of your nonprofit must be clearly outlined in a business plan.

Nonprofit business plans are sometimes required by the board of directors, or by the administration under which a nonprofit operates.

In summary, a nonprofit business plan should include the following information:

1. Establish your goals and milestones.
2. Gain a better understanding of your beneficiaries, partners, and other stakeholders.
3. Document your fundraising/financing model and assess your nonprofit’s feasibility.
4. Demonstrate your commitment to your nonprofit and attract investment.
5. Establish a board of directors and recruit volunteers.
6. Make sure your nonprofit is positioned correctly and your message is clear.
7. Make you aware of new opportunities and encourage you to research them.
8. Hold yourself accountable for your plan and iron out all of its kinks.

It is important to consider the following factors before developing your nonprofit business plan:

• Who is your target audience?  E.g. A donor will be your target audience if you are interested in fundraising. Potential partners will be your audience if you are interested in forming partnerships.

• Can you tell me what you would like their response to be? Depending on your target audience, you should focus on the key message you want them to receive in order to achieve your goals.

The 10-Step Guide to Writing a Nonprofit Business Plan

Step 1: Collect data

Gather financial, operating, and other relevant data before beginning the writing process. At the very least, you should include financial statements detailing operating expenses and a spreadsheet indicating the sources of funding if your nonprofit is already in operation.

Prepare materials regarding the organization’s funding sources and operational funding projections, including projected costs, if your nonprofit is new.

Step 2: Get to the heart of the matter

After all, it is a nonprofit organization. Nonprofit business plans should begin by describing the values and mission of the organization statement. Describe the vision, the guiding philosophy, and any other principles that provide the motivation for the work. You will be able to refine and clearly communicate your nonprofit message as a result.

The mission statement of your nonprofit can also help you establish milestones, determine the problems you seek to solve, identify your target audience, and plan for the future.

If you are looking for some inspiration, check out these great examples of mission statements. For help writing your statement, download our free Mission & Vision Statements Worksheet.

Step 3: Consists of outlining

Write an outline of your nonprofit business plan. Include everything you intend to include in your business plan (e.g. marketing, fundraising, human resources, and budget).

The purpose of an outline is to assist you in focusing your attention. It offers a roadmap from the beginning of your writing process, to the middle of it, and to the end. Outlining actually assists us in writing more quickly and more effectively.

The purpose of an outline is to help you understand what you need to communicate to your audience, whether it is in the right order, and if the right amount of emphasis is placed on each topic.

We recommend using our Nonprofit Business Plan Outline to assist you with this step. We will discuss that in more detail later.

Step 4: Develop products, programs, and services

In this section, describe in more detail what your nonprofit organization does.

1. Do you offer any products, programs, or services?
2. What are the benefits that your nonprofit provides to the community?
3. Is your nonprofit meeting a need, and what are your plans to do so?

E.g. As part of its mission, the American Red Cross provides five key services: disaster relief, support for American military families, lifesaving blood, health and safety services, and international assistance.

Don’t skimp out on program details, including the functions and beneficiaries. This is generally what most readers will care most about.

However, don’t overload the reader with technical jargon. Try to present some clear examples. Include photographs, brochures, and other promotional materials.

Step 5: Develop a marketing plan

A An effective marketing plan is essential for a nonprofit to achieve its goals. If your organization is already in operation, describe in detail all of your current marketing activities: any outreach activities, campaigns, and other initiatives. Identify the outcomes, activities, and costs associated with your marketing plan.

Describe your projections based on specific market data gathered by your nonprofit.

It is often the most detailed section of your business plan, since it outlines exactly how you intend to achieve your goals.

1. Describe your market, including your target audience, competitors, beneficiaries, donors, and potential partners.
2. Include any market analyses and tests you have done.
3. Provide an overview of your plan for reaching your beneficiaries.
4. Indicate the specific outcomes of your marketing activities.

Step 6: Develop an operational plan

It is important to explain how your nonprofit plans to maintain operations and how you will evaluate the impact of your programs in the operational plan.

A company’s operational plan should provide an overview of its day-to-day operations, including the people and organizations with whom it interacts (e.g. partners and suppliers), any legal requirements it must comply with (for example, if you distribute food, you will need to obtain licenses and certifications), any insurance that is required, etc.

The operational plan should also include a section on your people, or your team. Include the people who are crucial to the success of your organization, and any staff changes you plan as part of your business plan.

An organizational chart can be included in the appendix to illustrate how your organization operates. Find out more about the six types of nonprofit organizational charts and see them in action in this free e-book. 

Step 7: Develop an impact plan

It is equally important to develop an impact plan for a nonprofit as it is to develop a financial plan. Nonprofit organizations aim to create social change and a social return on investment, rather than merely to generate a financial return.

You should describe in detail how your nonprofit intends to achieve this goal in your impact plan. Your plan should describe the type of change you are seeking, how you intend to achieve it, and how you intend to measure it.

In this section, you will be able to turn your purpose and motivation into concrete accomplishments your nonprofit wishes to accomplish and define specific goals and objectives for your organization.

It’s these that define the real bottom line of your nonprofit, and they’re the key to unlocking funding. A potential funder would like to know for whom, in what manner, and exactly how you will measure the impact of your project.

Step 8: Develop a financial plan

In your nonprofit business plan, this is one of the most important components. Your nonprofit will be able to meet its basic financial needs through the creation of a financial plan.

To stay operational, nonprofits need a certain amount of funding, so it’s crucial to ensure your organization will meet that level.

Creating a financial plan involves the following steps:

• Provide an overview of your nonprofit’s current and projected financial position.
• An income statement, balance sheet, cash flow statement, and financial projections should be included.
• If you have received any grants, made significant contributions, or provided in-kind support, please list them.
• Describe how you plan to raise funds.
• Determine the gaps in your funding and how you will address them.
• Consider what will be done with a potential surplus.
• If necessary, include startup costs.

Complete this section of the business plan if your nonprofit is already operational.

When the public demands transparency regarding the use of their donations, knowing the financial details of your organization is essential.

Step 9: Summary of the report

A nonprofit executive summary is usually written last, but placed first in your business plan. It provides an overview of the entire business plan. A non-profit’s mission and purpose should be described on the first page of the proposal, as well as a summary of your market analysis that proves an identifiable need and an explanation of how your non-profit will meet the need.

It is in the Executive Summary that you sell your nonprofit and its ideas. Your organization should be described clearly and concisely in this section.

You should customize your executive summary depending on your audience (e.g. if your main objective is to win a grant or hire a board member, your executive summary will look different).

Step 10: Attachment

You should include additional documents in the section that are relevant to your nonprofit, such as an organizational chart, the current budget, a list of board members, your IRS status letter, balance sheets, etc.

The appendix contains additional information that might not be suitable for your business plan’s format (for example, it might unnecessarily lengthen or make the document less readable).

The Do’s and Don’ts of Nonprofit Business Plans

Do:

• Use simple, easy-to-understand language when writing.
• Focus on the point, support it with facts, and then move on.
• Graphs and descriptions of the program should be included.
• An executive summary should be included.
• Ensure that sufficient financial information is provided.
• Adapt your business plan to the needs of different audiences.
• Show enthusiasm and remain authentic.

Don’t:

• Don’t make the business plan too long.
• Too much technical jargon is used.
• The plan should not be overloaded with text.
• Do not drag out the writing process, but do not rush it either.
• Gloss over the cause without providing a clear explanation of how your activities will contribute to the cause.

Format:

• Make sure your formatting is consistent.
• Margins should be set at one inch.
• For the body of the document, use a reasonable font size.
• When printing, use a serif font such as Times New Roman or Courier. Use sans serif fonts such as Verdana or Arial for digital use.
• Each section should be started on a new page.
• Do not allow your plan to print and leave a scribble
• To ensure that the plan is error-free, have several people review it before it is printed.

Template for a nonprofit business plan

In order to assist you in getting started, we have created an outline for a nonprofit business plan. As a framework for your nonprofit’s business plan, this outline can be used regardless of the area of focus. With this guide, you will have a better understanding of how to organize your nonprofit business plan and what should be included in it. In addition, we have provided several questions and examples to assist you in creating a detailed nonprofit business plan.

With Donorbox, we strive to make your nonprofit experience as productive as possible, whether through our donation software or through our advice and guides on our Nonprofit Blog. You can find more free, downloadable resources in our Library.

As a Conclusion

There are many nonprofit organizations that are founded with passion and enthusiasm but without a proper business plan. A common misconception is that merely because an organization is labeled as a “nonprofit,” it does not have to function as a business.

A nonprofit organization is, however, a business, and many of the same rules that apply to for-profit companies also apply to nonprofit organizations.

Your nonprofit business plan consists of your marketing plan, strategic plan, operational plan, impact plan, and financial plan. You do not have to start from scratch. You can use the nonprofit business plan outline we have provided to assist you in creating your own business plan. 

Remember that your nonprofit should not be set in stone – it can and should change and evolve over time. In other words, it is a living organism. In spite of the fact that your vision, values, and mission will likely remain the same, you may need to revise your nonprofit business plan on a regular basis. Make sure you keep your audience in mind and adjust your plan accordingly.

Lastly, don’t let your plan sit on a shelf for too long. Print it out, put up posters on your office walls, and read from it during your team meetings. Use all the research, data, and ideas you’ve gathered and put them into action!

We also have articles dedicated for starting a nonprofit in different states in the United States, including Texas, Minnesota , Oregon , Arizona , Illinois , and more. For more information, please visit our Nonprofit Blog .

Visit the website to learn more about Donorbox, our all-in-one online fundraising tool.

You can design your own website. The easiest way to make sure your website can accomplish all of these goals is to hire a pro. You’ll have more time to run and grow your business.

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